With 325 condominium projects on the market and another 173 towers under construction, Toronto’s skyline is spiking with condo units and cranes, with more new buildings underway than in any other city in North America.

Sunny Freeman – The Canadian Press

A new condo report suggests first-time buyers, retirees and population growth will continue to fuel demand and price growth for the compact living spaces over the next few years.

The study by Genworth Canada found that average condo resale prices are expected to rise next year in seven of the eight metropolitan centres studied.

Prices in Toronto are projected to jump 2.5% to $312,352.

The highest increase however, is expected to be in Edmonton where prices could rise 3.2%.

Vancouver is the only city where condo prices are expected to drop, by 2% to $348,152.

The report stands in contrast to warnings from economists and officials that the condo market in some hot markets is reaching bubble territory that could soon burst.

Comment: And many of us who work in the industry. We know who is buying condos, we know why. We help investors find tenants, or even help renters go through bidding wars to find, yes, a rental condo. Our boots are on the ground, yet we are never consulted and our opinions are always deemed biased. But yet, sometimes other “experts” agree with us.

The Bank of Canada and federal Finance Minister Jim Flaherty have cautioned Canadians repeatedly to moderate borrowing on real estate, declaring household debt to be the domestic economy’s number one enemy.

Comment: We should all moderate borrowing on EVERYTHING. Not just real estate, but cars and TVs and vacations.

The central bank noted certain segments of the housing market that have a persistent oversupply – such as condos in Toronto – face a higher risk of a price correction.

Comment: Yet, the inventory levels have remained mostly constant for almost a decade. Immigration to the city is constant, if not rising. New households are being created at a rate of some 30-50,000 per year. With 25-28,000 condos being completed each year. There is still very health demand for a supply that is not quite high enough yet. And remember, if condo completions drop to 20,000 this year or next, the households creation level stays stead – thus increasing demand.

Genworth – which earns revenue from selling mortgage insurance – notes that rising prices for single-detached homes are driving first-time buyers to condos, but retirees also continue to prop up demand.

Comment: And empty nesters, snowbirds, renters and those who simply prefer living downtown to the suburbs.

It suggests that the population is expected to grow in all eight cities studied over the next few years, while employment growth and low interest rates should also support the market.

“This data corroborates our view that the demand for condos in Canada, particularly at the price-point we insure, is well supported by our economy and our population,” said Brian Hurley, chairman and CEO of Genworth Canada.

“For those seeking to own a home affordably in urban centres, condos remain a good option.”

The Genworth Canada report, produced with the Conference Board of Canada, reviewed trends in Quebec City, Montreal, Ottawa, Toronto, Calgary, Edmonton, Vancouver and Victoria.

Census figures for 2011 released in February show multi-unit dwellings – a category that includes condominiums – making up roughly half of all new housing stock, a category traditionally led by detached homes.

The numbers also indicate that Canadians are flocking to urban centres. Toronto’s population jumped more than 17% over the previous census period in 2006.

Comment: And they all need somewhere to live!

A recent CMHC report said housing starts and home sales have been strong in 2012 – particularly when it comes to multiple-dwelling units such as townhouses, condos and apartments – but will soften moderately in coming months into 2013.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto Realtor with Century 21 Regal Realty. He did not
write these articles, he just reproduces them here for people who are
interested in Toronto real estate. He does not work for any builders.
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